Portfolio enhancement by secured financing

As part of Societe Generale's series of Meet the Experts presentations, Roger Kim and Victor Gauvin discuss asset exchange.

Traditionally, insurance companies custodise their asset portfolios until maturity while generating additional revenue via short-term asset lending arrangements with their custodians. However, this is a suboptimal scheme as it reduces profitability and restricts the insurer from effectively investing the cash proceeds from lending out the assets. Societe Generale has an optimal approach to borrowing assets from insurers for longer term, from one year to five years or even longer. It offers considerable flexibility in asset class, trade format and tenor profile. This could effectively fit insurers’ needs from both profitability and asset/liability management-matching perspectives.

This white paper looks at the Basel Committee's BCBS239 principles, also known as PERDARR (Principles for Effective Risk Data Aggregation and Risk Reporting), which comes into force from 1 January 2016.

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US insurer MetLife is fighting its designation as a systemically important financial institution - a label handed out by the FSOC in December. State supervisors are also questioning the decision: www.risk.net/2391615. Should MetLife be supervised as a Sifi?